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Cash Management

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  1. Cash Management NMASFAA 2014 Brent Small Director Financial Aid Eastern New Mexico University

  2. Administrative Capability Standards • No one office or individual is allowed to authorize awards and make disbursements of Title IV Funds • Individuals who are organizationally independent • Not members of the same family • Do not exercise substantial control over the school

  3. Standards Cont. • Policies and procedures defining responsibilities for each office regarding Title IV Funds: • Approval • Disbursement • Delivery • ALL INFORMATION received by ANY institutional office regarding eligibility for Title IV funds must be conveyed to the financial aid office.

  4. Award Year Award Year • Period used to measure the length of a schools eligible programs and to determine a students eligibility for Title IV funds • Defined by School for each of its programs • Consists of: • Weeks of instructional time (Minimum) • 30 Weeks for credit hour programs • 26 Weeks for clock hour programs • Credit or clock hours (Minimum Undergrad) • 24 semester or trimester • 36 quarter • 900 clock hours

  5. Payment Periods • All Title IV funds, except Federal Work-Study, must be disbursed on a payment period basis • Determined based on the structure of the students academic program. • May be: • Credit hour with standard or non standard terms that are substantially equal • Credit hour with non standard term that are not substantially equal • Nonterm or clock hour programs

  6. Standard terms are: • Semesters • Trimesters • Quarters • Nonstandard terms are: • Not semesters, trimesters, or quarters • Terms for which the program uses a different credit measure • Substantially equal – no term in the program is more than two weeks longer than any other term

  7. Payment Periods For credit hour with standard or non standard terms that are substantially equal in length the Payment Period is: • Term for standard term programs • Nonstandard term for non standard term programs with substantially equal terms Funds must be disbursed by the term or nonstandard term for all Title IV programs, except FWS

  8. Authorizations • Must obtain authorization from a student (or parent borrower), before you can: • Use Title IV Funds to pay for educationally related charges other than tuition, fees, intuitionally contracted room & board • Credit FWS to pay educationally related charges for current or prior year • Disburse FWS by Electronic Funds Transfer (EFT) • Hold Title IV credit balances

  9. Authorizations • Authorizations must include and explain: • Title IV funds covered • Period of time for which the authorization is active • That the student or parent can cancel or modify at any time • Cancelations are not retroactive • Schools cannot require or coerce the student to provide any authorization • Regardless of authorizations, loans funds must be paid to student by the end of the loan period and Other aid must be paid by the last payment period of the award year

  10. Prior Year Charges • Without Authorization -school may use current year funds to satisfy prior award year charges for tuition, fees, institutionally contracted room and board. • With Authorization – school may use current year funds to satisfy prior award year “educationally related charges” • School may not pay prior year charges in excess of $200.00 • FSA Handbook Volume 4 Chapter. 2 Page 35 • Checklist in Handout

  11. Notifications • General Notification – notifies student of Title IV Eligibility and Payment Information. Sent, BEFORE funds are disbursed, to all students Receiving Title IV funds. Can be electronic or written. Must include: • Amount to be received from each program, including PLUS • Expected disbursement date(s) • Method of disbursement • Type of loans if any, Subsidized or Unsubsidized • FWS amount authorized to be earned during award period

  12. Notifications Cont. • Disbursement Notification- Notifies student that loan or TEACH fund are/will be credited to their student account. Can be electronic or written. Must include: • Anticipated disbursement date and amount • Borrowers right to cancel all or portion of award • Procedures and deadlines for cancelling When: • Teach and Loans if school obtains affirmative confirmation – no earlier than 30 days before and no later than 30 days after crediting students account • If school does not obtain affirmative confirmation – no earlier than 30 days before and no later than 7 days after crediting students account

  13. Disbursement of Title IV Funds General Rules • Disbursement - Making a payment of Title IV funds: • To the student’s school account • Directly to the student or PLUS borrower • Funds are considered disbursed on the date the school does either of the above • The structure of the students program of study determines the date on which the school may make a disbursement for any payment period • Funds may be paid in intervals the school determines will best meet the students needs

  14. Early Disbursement • Standard term credit-hour programs the earliest a school can make a disbursement is 10 calendar days before the first day of class for the payment period • Nonstandard Term, nonterm, and clock hour programs the earliest a school may make a payment is the later of: • 10 calendar days before the first day of class for the payment period • The date the student completed the previous payment period for which he or she received Title IV funds • Program specific rules apply to direct loans

  15. Late Disbursement – provisions apply when the student completed the payment period before all Title IV funds for the payment period were disbursed. • Permitted if • Student or PLUS borrower meets regulatory conditions for late disbursement (Handout) • Law or other regulation does not otherwise prohibit disbursement of the funds • When considering disbursements for a previously completed payment period within the award year, enrollment must be determined based on coursework the student completed.

  16. Eligibility at Disbursement A school must have a process to determine the student is eligible to receive a Title IV disbursement 34 CFR 668.164 (b)(3) • Student is enrolled in classes for the payment period • Disbursement of a Pell grant will not exceed the student’s Lifetime Eligibility • NT or NSTNSEL – Student has completed previous payment period • Except for DL, If the disbursement occurs on or after the first day of classes, the student has begun attendance in the classes on which eligibility was based • For Direct loans the student is enrolled at least half time • First time borrowers have completed Entrance Counseling & MPN and completed the first 30 days of the program • For Teach grants the student has completed all applicable counseling, ATS and GPA standards Note: Some Title IV funds may have specific disbursement requirements, i.e. Multiple Disbursement of Direct Loans

  17. Program Specific Requirements • Teach • Signed Agreement to Serve for that award year • FSEOG • Equally divided among payment periods • Have a Pell Grant award • Perkins • Signed promissory note • Equally divided among payment periods • FWS • Paid at least monthly for hours worked • Student must be informed of the amount authorized to earn and how and when they will be paid prior to paying FWS

  18. Program Specific Requirements • Direct Loan • Multiple Disbursement • 30 Day Delay • Entrance Counseling • Master promissory note • Continuous Eligibility

  19. Disbursement Methods • Direct Cash Disbursement • Check or Similar Instrument • Mailed • Notified • After 21 Days must mail • EFT/ Direct Deposit • School Bank Account and Stored Value Cards • Crediting Students School Account

  20. Title IV Credit Balances A Title IV credit balance occurs any time the total amount of Title IV funds credited to a student’s school account exceeds the total amount of the student’s allowable institutional Charges • Non-Title IV funds are not considered when determining whether a Title IV credit balance exists • Credit balances may be held with Authorization • If authorization is rescinded the balance must be paid no later than 14 days from rescission. • Credit balances must be paid to the student within 14 days of the later of the: • Date the balance occurred after the first day of the payment period • First day of classes for the payment period, if the credit balance occurred on or before the first day of classes • Title IV credit balances may be paid to the student using any of the disbursement methods, cash, check, EFT/Direct Deposit, school required bank account or Stored value cards*

  21. 14 Day Example

  22. Books & Supplies • A school must provide a way for Federal Pell Grant recipients to obtain or purchase books and supplies, by the 7th day of a payment period, if ten days before the payment period: • The school could disburse the Title IV funds the student is eligible for • The disbursement would result in a Title IV credit balance • The amount provided must be the lesser of: • Amount of the credit balance • Amount the school determines the student needs • The School must have a policy under which Pell recipients can opt out of this method • No Authorization is required if the student utilizes the schools method of obtaining books and supplies

  23. Requesting Title IV Funds COD • Used to report and reconcile originations and disbursements for: • Pell • IASGs • TEACH • Direct Loans G5 • U.S. Department of Ed’s drawdown and funds delivery system • Communicates with COD • School request programs funds for: • Pell • IASGs • TEACH • Direct Loans • Campus Based Aid • FWS, FSEOG, Perkins*

  24. Funding Methods • Advanced Payment School: • initiates drawdowns via G5 • Substantiates draws with disbursement records in COD • Receives initial Cash Funding Level (CFL) prior to July 1 for Direct Loan • Reimbursement Payment • Funds are not available to the school until COD has accepted and posted actual disbursement records • ED initiates the drawdown of funds • No CFL • Disbursements submitted on or after scheduled disbursement date • Cash Monitoring Payment • Similar to reimbursement but much more restrictive

  25. Maintaining Title IV Funds • Schools must maintain Title IV funds in a bank or investment account that is federally insured or secured by collateral of value reasonably equivalent to the amount of Title IV funds in the account • Schools are not required to keep Title IV in separate accounts unless ED requires • Accounts containing Title IV funds must be identified as “Federal” or by notifying the bank and documenting such notice • Schools may only use Title IV funds for disbursements to student, administrative cost allowance, or other program specific uses

  26. Maintaining Title IV Funds • Federal Perkins Loan funds must be maintained in interest-bearing bank or investment accounts* • Other Title IV program funds must be maintained in interest bearing or investment accounts in most cases • Interest or revenue earned on Title IV funds during an award year must be paid to ED at least annually • Perkins revenue must be retained as part of the portfolio • Up to $250 of revenue earned on other funds may be retained by the school to pay for administrative expenses

  27. Administrative Cost Allowance (ACA) Schools are allowed an Administrative Cost allowance (ACA) for the Federal Pell Grant and campus-based programs to help defray the cost of administering these programs. • Pell ACA is $5.00 per student receiving a Pell Grant Award • Based on availability • Deposited directly to school • Campus Based ACA is a percentage of total disbursements of CB funds • 5% of the first $2,750,000 • 4% of $2,750,000 - $5,500,000

  28. Excess Cash Excess cash is any amount of Title IV funds (not Perkins) that a school does not disburse to student or parents by the end of the 3rd business day following the date the school: • Drew Down funds • Deposited or transferred to its Federal account, previously disbursed funds • Funds from award adjustments, recoveries, or cancellations A school may retain excess cash not to exceed one percent of the total funds a schools drew down the prior year for up to 7 days.

  29. Returning Title IV Funds(NOT R2T4) • Undeliverable Title IV Funds must be returned to the appropriate Title IV program. • Funds are considered undeliverable if: • A check sent by mail is returned or not negotiated (cashed) • An EFT is rejected by the bank • Undeliverable Funds must be returned no later than 240 days after the date the initial check or EFT was issued • Schools may make additional attempts to disburse and contact the student • Must be made within 45 days of the funds being returned or rejected • Title IV funds must NEVER escheat to the school or to a state